In Fairness to Cities

Not long ago New York, Chicago, Boston and Washington, D.C., were poster children for urban decay. But these cities came roaring back: they tapped deep wells of experience in finance, communications and technology to flourish in a globalized world. They illustrate perfectly the power and resilience of the city as brain trust. Although they have their problems, urban areas continue to lure new residents because of the economic, health and educational benefits that accrue from face-to-face social networking. But if cities are so beneficial, then why are U.S. policies stacked against them?

In matters of housing, education, transportation, the environment and social services, existing rules and spending priorities give cities a raw deal. Cheap gas, highway subsides, tax incentives for home ownership, complacency over urban education and the apportionment of legislators all give preferential treatment to suburbs and rural areas. Even national leaders who should be cheerleaders for an evenhanded urban policy have faltered. Barack Obama, the most urban president since Theodore Roosevelt, skewed the stimulus bill toward more dollars for rural America. The five least populated states got twice as much money per capita as the rest.

Antiurban policies hurt denizens not just of downtown urban cores but also of broader metropolitan regions—and, arguably, the nation as a whole. Cities contribute to economic growth out of proportion to their populations. When they are dragged down, everyone pays the price; when they do well, so do their hinterlands. The rebound of Boston, for example, has enriched the entire state of Massachusetts, which depends heavily for its well-being on the new ideas and technologies hatched on the banks of the Charles River.

To be fair, the dividing line between city and suburb is fuzzy, and it would be easy to make too much of the distinction between urban cores and the rest of the country. The real concern is one of imbalance. Analysts have suggested a number of ways to rectify it. First, cap the home mortgage deduction, which represents a subsidy for homeowners (mostly suburban) at the expense of renters (mostly urban). Such a move should be complemented by steps to increase the supply of middle- and low-income apartments in city centers, which have become too expensive for many Americans. Second, raise gas taxes and put in place congestion pricing in urban areas so that society no longer subsidizes driving. These revenues could enhance mass transit, which, despite being more environmentally friendly, now often costs more than driving to work. Third, consider radical steps to fix gargantuan, unwieldy urban school systems saddled with the challenge of educating tens of thousands of rich and poor within their districts. Urban economist Edward Glaeser, who has two articles in this issue, suggests that solutions to such a tall order might come from either the left or right of the political spectrum: a nationwide high-quality school system, as in France, or a serious effort to put in place a voucher system.

Ultimately, the trouble is that the U.S. political system is rigged against densely populated areas. The system of earmarking funds by Congress means that infrastructure money gets allocated based on political horse trading rather than on the demographics of where people actually live and work. Letting the people of Iowa and New Hampshire always go first in the presidential primary season has much to recommend it—the citizens of those states take their privileged role seriously—but it means that candidates have little incentive to speak to urban concerns such as housing policy or decaying infrastructure.

The basic issue is fairness. Why should government policy favor owning over renting, driving over mass transit, or kids in one school district over another? The current incentives encourage people to settle in the outskirts when they might otherwise prefer to live downtown—a bias that makes little sense even when you leave out its environmental costs. And those costs are enormous. To keep our carbon emissions in check, we will need to edge closer to our neighbors. From the perspective both of simple fairness and of rational, science-based public policy, eliminating the incentives for citizens to spread out should be our goal.